Cablegate: Amcham White Paper Focuses On Human Resource And

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 TAIPEI 002653

SIPDIS

SENSITIVE

DEPT FOR EAP/TC
PLEASE PASS AIT/W, USTR
COMMERCE FOR 4400/ITA/MAC/M-BMORGAN
COMMERCE FOR 3005/ITA/CS/ADVOCACYCENTER BLOPP AGELFUSO
COMMERCE FOR 3132/ITA/CS/OIO/DRD EAP JHAMILTON

E.O. 12958: N/A
TAGS: ECON ETRD EINV TW
SUBJECT: AMCHAM WHITE PAPER FOCUSES ON HUMAN RESOURCE AND
PUBLIC HEALTH ISSUES

REF: A. TAIPEI 2124
B. TAIPEI 2526
C. TAIPEI 2546

Summary
-------

1. (SBU) The American Chamber of Commerce in Taipei's
(Amcham) 2005 White Paper focuses primarily on human
resources and public health. It urges steps that would
enable firms operating in Taiwan to hire more foreign
employees, including PRC nationals - both to relieve
manpower shortages and internationalize the workforce.
Health-related recommendations address intellectual
property concerns and barriers that limit market access for
U.S. pharmaceuticals and medical devices. Other important
issues include completing financial sector reforms,
improving government procurement processes, and the
establishment of the National Communications Commission
that would act as a regulator for telecommunications and
broadcasting. Amcham's White Paper priorities have changed
little over the past three years, reflecting the Taiwan
government's difficulty in managing cross-Strait issues and
in dealing with some of the challenges facing its maturing
economy. If progress doesn't improve soon, it risks
falling behind its competitors in the region. End summary.

2. (U) The American Chamber of Commerce in Taipei released
its 2005 Taiwan White Paper on May 31 with advice for
Taiwan's government on improving the island's business
climate. This year's White Paper had two main focuses -
human resources and public health. Among the paper's seven
overall recommendations, eliminating government
restrictions on hiring decisions moved to the top of the
list, followed by improving Taiwan's public health and
healthcare environment. Tightening intellectual property
protection was the third item. This year the paper
highlights the importance of intellectual property
protection to public health due to the dangers posed by
counterfeit drugs and agro-chemicals.

3. (U) The other overall recommendations are insisting on
world-class infrastructure, building on economic synergies
with China, completing financial reforms, and strengthening
the attack on corruption. The seven recommendations are
identical to the 2004 White Paper recommendations although
human resources moved up the list to replace cross-Strait
issues as the top priority. They also include all six of
the recommendations made in the 2003 White Paper. The 2005
White Paper reports that five of the 69 priority issues
identified in the 2004 White Paper have been resolved.
Thirty-seven priority issues from 2004 have been carried
over to the 2005 White Paper, and 32 new issues have been
added.

Human Resources - Internationalization
--------------------------------------

4. (U) Many of the human resources-related recommendations
in the 2005 White Paper would enable firms operating in
Taiwan to hire more foreign employees, including PRC
nationals - both to relieve manpower shortages and
internationalize the workforce. The paper urges the
government to eliminate the two-year work experience
requirement for work permit applications and to allow
companies to pay foreign interns. Amcham also urges the
government to convene a high-level interagency meeting to
work out policies to facilitate hiring of PRC technical
personnel. In addition, it recommends several measures to
expedite short-term visits by PRC nationals working for
multinational companies and the establishment of direct
transportation links.

Health - IP Protection and Market Access
----------------------------------------

5. (U) Amcham's health-related recommendations address
intellectual property concerns or barriers that limit
market access for U.S. pharmaceuticals and medical devices.
All of the priority issues identified by Amcham's Agro-
chemical Committee are intellectual property concerns, such
as trademark infringement and the smuggling of patent-
protected products. Amcham highlights the health risk
posed by counterfeit agro-chemicals. The Pharmaceuticals
Committee also offers three industry requests related to
intellectual property, including more resources for the
surveillance and investigation of counterfeit drug sales as
well as stronger sanctions for violators.

6. (U) Most of the remaining health-related issues concern
the registration and approval processes for drugs and
medical devices or problems in the national health system
that discourage the purchase of U.S. medical products,
including innovative pharmaceuticals. Approval and
registration problems include plant inspection requirements
for pharmaceutical manufacturers and the ability of the
Department of Health to efficiently process registration
applications for medical devices. Concerns about the
national health system are centered on the Bureau of
National Health Insurance's implementation of the "global
budget" system, which seeks to limit hospital spending, but
has had the perverse effect of encouraging hospitals and
clinics to seek additional resources by demanding steep
discounts from medical supply and pharmaceutical companies,
creating a bias towards prescribing generic drugs, and
encourages the practice of reusing single-use medical
devices.

Other Issues
------------

7. (U) The Banking, Capital Markets and Insurance
Committees together name 14 priority issues for Taiwan's
financial sector. Many identify very specific problems in
Taiwan's regulatory regime. However, some of the
recommendations ask for broader changes, reflecting the
continuing need for substantial reform. These include
passage of the draft Unified Reorganization and
Bankruptcies Law, which would help create an effective
mechanism for identifying insolvent companies that can be
successfully reorganized; passage of a Finance Company Law
to allow non-bank lenders to take a more active role in
Taiwan's financial markets; and allocation of funds for the
Financial Reconstruction Fund and other measures to address
non-performing loan issues. (Note: Ref C reports on the
May 31 passage of legislation allocating funds to the FRF,
though only 10 percent of what had been requested, to
resolve nonperforming loan issues. End note.)

8. (U) Regarding Taiwan's infrastructure, Amcham's 2005
recommendations focus on government procurement. The
Infrastructure Committee asks Taiwan unilaterally to agree
to abide by the conditions of the WTO's Government
Procurement Agreement. It also asks Taiwan to revise its
standard procurement contract to follow international
standards that would encourage more foreign participation
in government tenders. (Note: Ref B reports on complaints
by Taiwan officials that the White Paper did not recognize
some steps that Taiwan took in 2004. End Note.) In
addition, both the Infrastructure and Chemical
Manufacturers Committee offer recommendations related to
Taiwan's power system, asking for enhanced energy security
through increased emphasis on coal and capital investment
that would produce a more reliable supply system.

9. (U) The Chemical Manufacturers and Environmental
Protection Committees both recommended revision of the Soil
and Groundwater Pollution Remediation Act, identifying the
assessment system and fees for environmental clean up as
problems with the current Act. In addition, both
committees requested that Taiwan improve its emergency
response system for chemical accidents. The Environmental
Protection Committee also asked the Taiwan government to
develop a clear and long-term strategy for complying with
the Kyoto Protocol for greenhouse gases.

10. (U) Other important recommendations include two
Telecommunications Committee requests. It asks that Taiwan
complete the establishment of the National Communications
Commission that would act as a regulator for
telecommunications and broadcasting and that Taiwan finish
the privatization of Chunghwa Telecommunications, the
island's dominant telecommunications service provider. The
Transportation Committee offered several specific
recommendations for Taiwan's Customs procedures as well as
measures to improve the ability of express delivery firms
to make local deliveries. The Committee also recommended
that Taiwan follow international standards for compensation
in cases of flight delay due to forces beyond the control
of air carriers (reported ref A). Finally, Amcham's new
Education Committee identified several barriers that
inhibit the ability of foreign firms to compete in Taiwan's
market for private education.

Comment - A C-minus Student
---------------------------

11. (SBU) If the 2005 White Paper were a report card,
former honor student Taiwan would be falling behind most of
its class. The fact that Amcham's overall recommendations
have barely changed in the last three years is symptomatic
of the Taiwan government's difficulty in dealing with the
new challenges facing its maturing economy and the unique
problems caused by cross-Strait tensions. The few bright
spots like progress on intellectual property protection are
sadly overshadowed. Many of Amcham's recommendations,
especially in human resources, would help the Taiwan
government achieve some of its own economic goals, such as
developing Taiwan as a regional operations and logistical
hub. If the Taiwan government does not increase the pace
of progress on these issues it risks falling behind its
competitors in the region. AIT/T will continue working
with Amcham and the Taiwan government to address these
important issues. End comment.

12. (U) The 2005 White Paper can be downloaded at
www.amcham.com.tw/publication wp.php.
PAAL

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